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Mulvaney Puts Early Stamp on CFPB Tenure With Case Pullbacks

Mick Mulvaney, director of the Office of Management and Budget who’s been tapped by
the White House as acting director of the Consumer Financial Protection Bureau, has
hit the pause button on two court cases in what may signal a different direction for
CFPB enforcement and investigation.

In the first case, the CFPB has withdrawn its previous opposition to a plan by Nationwide
Biweekly Administration, Inc., an Ohio-based mortgage payment company, to stay execution
of a $7.9 million judgment in favor of the CFPB.

In the second case, the CFPB has suspended for now any further action to proceed with
a civil investigative demand (CID) against Virginia-based Nexus Services Inc., which,
through a subsidiary, helps detained immigrants obtain bonds they must post in order
to be released from custody.

Neither move by itself marks decisive action by the CFPB, and both cases are still
active. However, Eamonn K. Moran, counsel at Kilpatrick Townsend & Stockton LLP in
Washington and a former attorney in the CFPB’s office of regulations, said the initial
actions by the CFPB could signal a less aggressive posture by the agency going forward.

“These are probably the first two cases in which the Bureau has taken a new direction
under the new leadership, though it’s not clear why these two were chosen,” Moran
told Bloomberg Law Dec. 5. The CFPB didn’t immediately respond to a request for comment
on the disputes.

The first case involves a 2015 CFPB lawsuit against Nationwide Biweekly Administration,
Inc., and Loan Payment Administration LLC that accused the companies and their owner
of deceptive mortgage payment practices. In November, Judge Richard Seeborg of the
U.S. District Court for the Northern District of California ordered the defendants
to pay $7.9 million in civil penalties. They sought to stay implementation of that
ruling without having to post a bond — an effort that the CFPB opposed in a Nov. 27
filing.

Just two days later, however, the CFPB withdrew its opposition, saying it’s not taking
any position on whether the bond is needed to stay execution of the judgment in the
case. Seeborg Dec. 4 ordered a temporary stay of execution of the judgment, pending
treatment of post-trial motions.

The Nexus Services case arose when the company
sued the CFPB in October after the agency
refused to lift a CID issued to Nexus. The CFPB said it was trying to learn whether Nexus
was engaged in unfair or deceptive practices in connection with bonds posted on behalf
of detainees, and whether that amounted to an extension of credit or an offer of credit.

Nexus recently asked the court for a preliminary injunction, but in a Dec. 4 docket
entry, Judge Amy B. Jackson of the U.S. District Court for the District of Columbia
said the CFPB has agreed to suspend any additional steps to enforce the CID against
Nexus pending resolution of the case on the merits. She said the Nexus motion for
a preliminary injunction is now moot.

Mulvaney’s leadership of the agency is the subject of a separate court battle. Leandra
English, who says she’s the rightful acting director of the CFPB, has filed suit in
federal court in Washington. English’s lawyers are expected to ask the judge in that
case for a preliminary injunction Dec. 6.

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